2023 ONSC 4829, 2023 ONSC 4829

CITATION : Chaudry v. Bank of Montreal, 2023 ONSC 4829 DIVISIONAL COURT FILE NO.: 526/22 DATE: 20231006 SUPERIOR COURT OF JUSTICE – ONTARIO DIVISIONAL COURT RE: ABID CHAUDRY, Appellant/Plaintiff AND: BANK OF MONTREAL, Respondent/Defendant BEFORE: Matheson J. COUNSEL: Robert L.

Colson and Chris Randall , for the Appellant/Plaintiff Matthew Sammon and Aoife Quinn , for the Respondent/Defendant HEARD at Toronto: August 24, 2023, by video-conference ENDORSEMENT [ 1 ] The appellant/plaintiff appeals from the order of Associate Judge Graham dated August 12, 2022 (the “Decision”), dismissing the appellant’s motion for leave to amend his statement of claim. [ 2 ] The underlying action is a wrongful dismissal claim arising from the appellant’s termination from employment at the respondent Bank of Montreal.

The appellant sued the respondent for wrongful dismissal, claiming a reasonable notice period of 36 months and damages totaling about $17 million. At a later stage, the appellant moved to amend his statement of claim to add a claim for an additional $10 million in damages for unjust enrichment, and, in the alternative, a claim for disgorgement of profits. The motion judge dismissed the motion. [ 3 ] For the reasons set out below, this appeal is dismissed.

Brief Background [ 4 ] There is no issue that, for the purpose of the underlying motion and this appeal, the facts as alleged in the statement of claim are assumed to be true. I need not recount them entirely. A high-level overview follows. [ 5 ] The appellant was employed by the respondent from 2002 to 2019, when his employment was terminated without cause and without advance notice.

At that point, he was a senior executive – the Managing Director, Head of Global Structured Products. [ 6 ] At the time of termination, the appellant’s compensation included a base salary of $275,000 and participation in a number of incentive and other programs, as well as employee benefits such as paid vacation, health and pension benefits. The appellant received more than $4 million in total compensation in each of the three years prior to termination due mainly to incentive payments. [ 7 ] The appellant’s employment was terminated in May 2019.

He sued for wrongful dismissal, seeking a 36-month reasonable notice period.

He claimed damages for breach of contract as follows: (i) $2.5 million for unpaid incentive compensation earned during 2019 prior to his dismissal; (ii) $15 million for compensation during the reasonable notice period; (iii) damages to replace employee benefits during the reasonable notice period and regarding pension benefits; (iv) reimbursement of mitigation expenses; (v) $250,000 in general damages; (vi) pre- and post-judgment interest at a rate equal to the rate of return that the appellant would have earned on the monies due to him from and after the date that those sums became due and owing and continuing until payment ; (vii) in the alternative, pre- and post- judgment interest at the default rates provided for in the Courts of Justice Act ; and, (viii) costs. [Emphasis added.]

[ 8 ] There was also a pleading that the respondent had been unjustly enriched because the appellant worked up to the termination date without the incentive payments yet being paid. There was no separate claim for relief regarding that pleading. [ 9 ] In the course of discovery, the appellant sought to amend his statement of claim. The amendments sought to add an additional claim for $10 million for unjust enrichment. This claim was described as seeking the return on equity earned by the respondent on the monies owed to the appellant on account of his wrongful dismissal.

The appellant claimed damages until the date he was paid the amounts owing to him, or, alternatively, disgorgement of that amount. [ 10 ] The pre-existing claim for pre- and post-judgment interest based on the appellant’s rate of return on investments remained in the claim. Decision under Appeal [ 11 ] As set out in the reasons for decision, the motion judge considered the applicable law regarding the test for leave to amend, unjust enrichment and disgorgement. [ 12 ] The motion judge noted that leave shall be granted with limited exceptions and discussed the high threshold for refusing leave.

The motion judge followed authority that he should only refuse a pleading amendment as legally untenable if it is “completely impossible of success.” [ 13 ] The motion judge then considered the law on unjust enrichment and disgorgement, including leading cases that are also relied on in this appeal: e.g. , Atlantic Lottery Corp. Inc. v. Babstock , 2020 SCC 19 , [2020] 2 S.C.R. 420; Kerr v. Baranow , 2011 SCC 10 , [2011] 1 S.C.R. 269; Professional Institute of the Public Service of Canada v.

Canada (Attorney General) , 2012 SCC 71 , [2012] 3 S.C.R. 660 (“ PIPSC ”). [ 14 ] The motion judge concluded that the pleading did not disclose a cause of action in unjust enrichment or a tenable alternative claim for disgorgement. Issues and Standard of Review [ 15 ] The overarching issue on this appeal is whether the motion judge erred in refusing to grant leave to amend the statement of claim to add the claim for unjust enrichment and disgorgement. [ 16 ] The appellant submits that the specific issues on this appeal are as follows: (

i) the test for amending pleadings; (ii) the finding that the proposed claim for unjust enrichment was untenable; (iii) the refusal to grant leave to add a claim for disgorgement; and, (iv) the finding that the proposed amendments constituted a new cause of action since the statement of claim already referred to unjust enrichment. [ 17 ] The appellate standard of review applies. For errors of law, the standard of review is correctness. For errors of fact there must be a palpable or overriding error, except that extricable errors of principle are also reviewed on the standard of correctness.

Discussion [ 18 ] On the first issue, the test for amending pleadings, the appellant does not point to any error by the motion judge. The motion judge articulated the correct test, as set out in the reasons for decision. I summarize the test as follows: (

i) r. 26.01 is a mandatory direction to the court to grant leave to amend unless prejudice would result that cannot be compensated for by costs or an adjournment; (ii) the facts as alleged in the statement of claim are presumed to be true, with limited exceptions that do not apply here, and the statement of claim must be read generously; (iii) leave to amend should only be refused in the clearest of cases, which include proposed amendments that disclose no cause of action; (iv) pleadings will only be found legally untenable if clearly impossible of success. [ 19 ] As set out in Atlantic Lottery Corp. Inc. v.

Babstock , at para. 19 , novel claims may be struck out if doomed to fail. [ 20 ] Moving to the second issue, the appellant submits that the motion judge erred in the application of the above test, finding that the proposed claim for unjust enrichment was legally untenable. [ 21 ] The motion judge correctly set out the elements of an unjust enrichment claim, citing the Supreme Court in Kerr v.

Baranow , at para. 32 , specifically that there must be “an enrichment of or benefit to the defendant, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment.” “Something must have been given by the plaintiff and received and retained by the defendant without juristic reason”: Kerr v. Baranow , at para. 31 . The motion judge found that the second element – a corresponding deprivation – was not met in this case.

[22] Quoting the Supreme Court in PIPSC, at para. 151, the motion judge held that “the enrichment and deprivation are the samething from different perspectives”. The enrichment and the deprivation are “essentially two sides of the same coin”. Therefore, themotion judge found that there must be a congruence between the benefit to the defendant and the plaintiff’s corresponding deprivation. There was no corresponding deprivation. [23] The appellant relies on Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303.

The majority held, at para. 38, that unjustenrichment is not restricted to categories that were traditionally considered unjust. Courts may identify circumstances where justice andfairness require one party to “restore a benefit to another”. [24] The appellant submits, based on Moore v. Sweet, at paras. 43-44, that there need only be some causal connection between theplaintiff’s loss and the defendant’s gain. This is an incomplete statement of the principles set out by the majority in Moore v. Sweet. [25] The majority relies on Pettkus v.

Becker, (SCC), [1980] 2 S.C.R. 834 and states as follows at para. 43: “Evenif a defendant’s retention of a benefit can be said to be unjust, a plaintiff has no right to recover against that defendant if he or shesuffered no loss at all, … the plaintiff must demonstrate that the loss he or she incurred corresponds to the defendant’s gain, in the sensethat there is some causal connection between the two.” Following PIPSC and prior Supreme Court cases cited, the majority in Moore v.Sweet, at para. 41, again found that the enrichment and deprivation are “essentially two sides of the same coin”. [26] Further, there is no doubt that the circumstances addressed in Moore v.

Sweet are markedly different from those advanced inthe appellant’s proposed claim. [27] In this wrongful dismissal claim, the appellant seeks three potential forms of relief for what, in civil litigation, is ordinarilyaddressed as pre- and post-judgment interest under the Courts of Justice Act. First, the appellant is seeking pre- and post-judgmentinterest on a different scale, based on the rate of return on investments that he would have earned on the damages up until the time ofpayment. There is no issue that this can be sought. It is contemplated by the Courts of Justice Act provisions on interest.

Section 130permits a party to seek a rate different from the default rates in the Act. [28] The second and third forms of relief are in the proposed amendments. The appellant seeks payment of the respondent’s returnon investments based on the same damages for the same period of time. In the alternative to payment at the respondent’s return oninvestments, the appellant seeks disgorgement. I need not consider the question of overlap between the three remedies because, if theyare all properly claimed, that can be addressed if the claim is successful.

The issue is whether the second and third remedies and therelated claim for unjust enrichment are available at all. [29] The appellant puts forward a broad application of Moore v. Sweet, without due regard for the full legal principles, discussedabove, and the very different context.

The appellant’s submissions amount to saying that in every wrongful dismissal claim (if not alsoevery breach of contract claim), a plaintiff can claim unjust enrichment and explore the defendant’s rate of return on investments with aview to getting an increased amount for the time value of money, supplanting the pre- and post- judgment regime in the Courts of JusticeAct and improving on the rate of return a plaintiff would themselves have earned on the amount awarded as damages. [30] Given the interest regime in the Act, compensating for the time value of money, it cannot be said that justice and fairnessrequire the growth of unjust enrichment as discussed in Moore v.

Sweet. In Moore v. Sweet, the enrichment received by the second wifecorresponded with the deprivation suffered by the first wife. In contrast, in this case the plaintiff did not suffer a loss based on therespondent’s return on investment. As held in Moore v. Sweet, a plaintiff has no right to recover against that defendant if he or shesuffered no loss at all.

Further, the Supreme Court has underscored the limits on damages for wrongful dismissal, which are the losssuffered by a plaintiff for the failure to give proper notice and, where appropriate, compensation for the wrongs associated with themanner of dismissal: Honda Canada Inc. v. Keays, 2008 SCC 39; [2008] 2 S.C.R. 362, at paras. 50-53. [31] The motion judge did not err in law in finding that there was not the required congruence between a benefit to the respondentand the appellant’s alleged corresponding deprivation. He followed well-established principles as set out in Supreme Court of Canadacases.

There is no tenable claim in unjust enrichment in this case. [32] There is then the issue of the alternative remedy of disgorgement. This was sought for unjust enrichment and in that regard, itneed not be addressed. However, the motions judge, reading the claim generously, also considered whether it could be available forbreach of contract. He made no error in following Atlantic Lottery Corp. Inc. v.

Babstock and finding that because the claim could becompensated for by the payment of money, disgorgement was not warranted. [33] Lastly, there is no error because the original statement of claim referred to unjust enrichment. It was included as follows:“Damages for breach of contract, wrongful dismissal, unjust enrichment and common law damages”. There was no separate reliefclaimed for unjust enrichment. The appellant relies on cases that consider whether a claim can be added after a limitation period. That itnot the issue here.

Timing aside, the claim must disclose a cause of action. [34] This appeal is therefore dismissed with costs to the respondent in the agreed upon amount of $24,000, all inclusive. ___________________________ Matheson J. Date: October 6, 2023